Iceland Jails Bankers, Erases Citizens’ Debt, Recovers Strongly

Let me start by saying that I did a search on this and this seems to be an update to what has previously been run here on this subject. My other reason for posting this is because in earlier threads it was noted that the media is not covering this - one thread was based on a blog...

Let me give credit to the author of the headline;

www.disinfo.com

Now lets go to the original story by Bloomberg;

www.bloomberg.com

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population, according to a report published this month by the Icelandic Financial Services Association.

(Note; this link was embedded in the above paragraph. It is the report mentioned - in Icelandic - for those that wish to run their translator on it.)

Icelandic Financial Services Association

“You could safely say that Iceland holds the world record in household debt relief,” said Lars Christensen, chief emerging markets economist at Danske Bank A/S in Copenhagen. “Iceland followed the textbook example of what is required in a crisis. Any economist would agree with that.”

Any economist would agree? I wonder does that mean that American Bankers, Wall Streeters, Federal Reserve leaders are not economists? Or does it mean that they are dishonest and have their own agenda that they are following here in the States?

“The lesson to be learned from Iceland’s crisis is that if other countries think it’s necessary to write down debts, they should look at how successful the 110 percent agreement was here,” said Thorolfur Matthiasson, an economics professor at the University of Iceland in Reykjavik, in an interview. “It’s the broadest agreement that’s been undertaken.”

In several previous threads I had held up the example of Venezuela and how well they did when Hugo Chavez did the same thing with that country's fictitious debt. Each time the naysayers have said that it would never work in a country this large and an economy this indebted, when I think what they really meant is that TPTB would never allow this to happen. Well now another country has shown us that this is indeed the way out of our man-made and contrived crisis.

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn.

Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch. The central bank imposed capital controls to halt the ensuing sell-off of the krona and new state-controlled banks were created from the remnants of the lenders that failed.

So to me this sounds like the way out of the Wall Street Wonderland that we seem to be stuck in. And one key ingredient are new state-controlled banks, as opposed to the bank-controlled State that we live in.

Of course the American bankers will not like any of this. After all, they just gained complete control over the country, they certainly wouldn't want to give it up so soon. However we the people need to step up to the plate and call our Reps and Sens and let them know that we need to assume the role of a Father who does not allow his children to play with his guns, especially when this one is pointed at our heads.

So the choice seems clear to me; do we want to follow the two examples of what has worked, or the myriad of examples of what is not working as in Greece, USA, Germany, and the list goes on and on...

“There are still a lot of people facing difficulties; at the same time there are a lot of people doing fine,” Kristjansson said. “It’s nearly impossible to say when enough is enough; alongside every measure that is taken, there are fresh demands for further action.”

Time to make our demands heard. I heard somewhere that each phone call a US legislator receives is viewed as representative of 1300 citizens who are too lazy to make the call, email or write the letter. Seems this little calculation could be used in our favor if we all quit being lazy. I have, how about you?

This seems to be working, the economy will never recover when the poor have nothing. You can only suck people dry for so long before simple math catches up with you. Paying for things as you go seems to be the best way. Maybe we just need to relax, be thankful for what we have and realize that credit cards, car debt, and house debt are not the answers. Lets stop promising our financial future by signing on the dotted line. Maybe our new mindset should be if I can't buy it, I don't really need it right now. IMHO we all share part of the blame for the mess we are in, but there is light at the end of this tunnel. It's called being responsible,

reply to post by Ittabena


Good points. I would also remind people that Ieland is also a MUCH smaller economy....easier to fix a problem that primarily arose from:

1) derivatives
2) too much credit flowing (from inside the country and outside) to the public and private sector.

Once problem 1 & 2 were resolved (the many derivatives were worthless, and credit was cutoff), they were left with a relatively contained problem: too much debt and a contained economy....

....you can fix that -- especially since their issues arose in such a short period of time....

Big economies are much, much harder and complex...

Good points nonetheless...

reply to post by willie9696

This seems to be working, the economy will never recover when the poor have nothing. You can only suck people dry for so long before simple math catches up with you. Paying for things as you go seems to be the best way. Maybe we just need to relax, be thankful for what we have and realize that credit cards, car debt, and house debt are not the answers. Lets stop promising our financial future by signing on the dotted line. Maybe our new mindset should be if I can't buy it, I don't really need it right now. IMHO we all share part of the blame for the mess we are in, but there is light at the end of this tunnel. It's called being responsible,

Of course you are right, completely, but when you factor in the shenanigans of the Credit Default Swap Swindle and the Mortgage Bundling as a zero value investment which soars beyond belief or reason...

Well, if this were a simple matter we would all understand it. It was all a big ponzi scheme, complete with slight of hand and no real coverage to this day. I took the time to understand what happened. in order to do that I had to delete all the conditioning we are all subjected to which tells us continually that economics is too difficult for most of us. It is not! The glossary is just purposely confusing and daunting.

If the Glass-Stiegel act were not done away with, we would not have any of these problems we face today. Similarly if the Federal Reserve were done away with we would be able to see what was going on in that corner of the economy because it would return our economy's control to Congress, who's feet could be held to the fire so to speak.

Zero reserve banking is what I am talking about, fractional reserve banking is what you are referring to.